INSUBCONTINENT EXCLUSIVE:
As zero-commission stock trading app Robinhood starts preparing to IPO, an engineering investment two years in the making could accelerate
trading fee like the $7 to $10 that incumbent competitors E*Trade and Scottrade charge
Relying on outside clearing also introduced bottlenecks around its innovation and user sign ups, limiting onboarding to business hours.But
today Robinhood will start migrating accounts to its new in-house clearing service over the next few months
That will save it from paying clearing fees on stock, option, ETF and cryptocurrency trades
In turn, Robinhood is eliminating or reducing some of its edge case fees: $10 broker assisted trades, $10 restricted accounts, $50 voluntary
corporate actions and $30 worthless securities processing will all now be free
Robinhood is meanwhile cutting its margin on fees passed on by banks or FedEx, so ACH reversal fees will drop from $30 to $9, overnight
including a $363 million Series D in May at a jaw-dropping $5.6 billion valuation just a year after raising at $1.3 billion
Currently Robinhood earns revenue from interest on money kept in Robinhood accounts, selling order flow to exchanges that want more
liquidity, and its Robinhood Gold subscriptions, where users pay $10 to $200 per month to borrow $2,000 to $50,000 in credit to trade on
After stints at Google and Udacity, she was hired two years to navigate the regulatory and engineering challenges of spinning up Robinhood
what the other side wants to give away
In the less than 1 percent chance of error, the clearing firm makes sure everyone is on the same page prior to settlement.Robinhood Clearing
They allow Robinhood to clear, settle (exchanging the dollars and shares) and ensure custody (keeping records of asset movements) of
No more waiting for clearing houses to adapt to its new products
And no more waiting the whole weekend for account approval as Robinhood can now approve accounts 24/7
These little improvements are critical to Robinhood staying ahead of the pack of big banks like Charles Schwab that are lowering their fees
to compete, as well as other startups offering mobile trading
fintech apps like Titan.Clearing comes with additional risk
Regulatory scrutiny is high, and the more Robinhood brings in-house, the more security work it must do
Yet if successful, the launch equips Robinhood for an ambitious future beyond playing the markets
It used to be all about stock trading
